An Interview with David Nash, M.D., M.B.A.: What Tomorrow Will Bring

Applying the principles of industry to the practice of medicine has occurred to a number of people at different points in their careers. It hit David Nash in high school.

September 1, 1997

Does the infant effort to standardize health care have its share of glitches, abuses and exaggerated claims? You'll get no argument on that from David Nash, M.D., M.B.A., associate dean and director of health policy and clinical outcomes at Thomas Jefferson University in Philadelphia. Still, the board-certified internist and author of The Physician's Guide to Managed Care sees a day coming — soon — when purchasers will know just what it should cost to treat a certain condition in a certain patient. That day will bring big changes for today's physicians and HMO administrators. For them, there may be no more important voice to listen to than that of Nash, the subject of this month's Q&A.

MANAGED CARE: It was a hectic morning, the stress level was high, and I tried to grab a bite on my way down here. I ended up driving Interstate Highway 95 with a taco in one hand, a Coke in the other and one finger on the wheel. And it occurred to me that in the medicine of the future I very well might have to pay higher premiums or accept a second class of care because of this behavior. That's another way of posing the question raised in a recent letter to the editor in Managed Care. How do we reconcile the notion of accountability, which seems central to managed care, with the fundamental principle of insurance, which is treating people more or less equally and spreading the risk?

NASH: I see it as more of a struggle between professional autonomy and public accountability. My sense is that the market will differentiate very much among risk-stratified groups who are patients. Translation: you will end up paying more. In the practice world of the future we'll have a very good idea about risk behavior and its relationship to outcomes and cost. And you can see that already on the horizon. Managed care is hoping to prove, and I believe it will, that there's money to be saved in better patient education. So here's the scenario. We improve patient education. We give patients more participatory power in clinical decision-making, so we're going to have to hold them more responsible for aspects of that decision-making as well.

MC: Will the public accept this change?

NASH: Oh, yes. In fact, I think you could argue, and you could muster some good facts to buttress it, that they — especially the upper middle class — want a greater say in this. They're becoming increasingly capable of discerning among practitioners, and they'll be willing to trade a little bit of extra cost for more choice.

MC: Higher premiums for greater choice.

NASH: That's right. That's going to differentiate the plans from one another in the marketplace. I can see a world where there's cardiac care level A, B and C or 1, 2 and 3 or gold, silver and platinum. And you can pay accordingly. If you're the prototypical managed care patient — the 35-year-old father of two who never goes to the doctor — well, you would hedge your bets and take the lower-level cardiac care. If you're a 55-year-old businessman and you've already had one myocardial infarction, you may go for the gold plate and pay the difference in the premium. And the smart managed care company of the future will be able to slice and dice the population according, in part, to those kinds of choices. I believe we will come to a point where we'll have a pretty darn good idea of the cost and outcomes based on risk stratification, just as we do in the hospital. We have predictive models on the inpatient side for severity of illness and we know pretty much what these people are going to cost, what their length of stay is going to be, and so on. Now we need to build similar models on the outpatient side, and they're already well under way.

MC: We published an article recently exploring efforts to reward the so-called "best" physicians for the quality of their work. So far, most such incentive pay programs are based on either preventive measures or patient satisfaction.

NASH: That's because the tools are still blunt on the payment side. Some managed care companies are doing a better job than others in linking "soft" outcomes measures and quality measures to the payment process. I think you'll see a lot more of that as we get more sophisticated in our patient satisfaction questionnaires. What I'd like to see is payment tied to performance with much more specificity and detail.

NASH: Through the application of national standards of care in the way Scott Weingarten does at Cedars-Sinai in Los Angeles (see Managed Care's July issue). You could drill down to a fairly detailed level — with mammography, for example. Right now, HEDIS 3.0 [the latest version of the Health Plan Employer Data and Information Set, developed by the National Committee on Quality Assurance to assess quality in health plans] is striving for a better percentage of population screened. That's important; no one would argue with that. What I would start to look for in addition is: What's your follow-up and yield on abnormal mammograms? What are your time-to-biopsy, time-to-diagnosis, time-to-surgery and five-year-survival rates? That's a lot different than saying, "What's your mammography rate?" Would you ever choose a managed care plan based on the frequency with which a test is performed? The answer is no. Not you as an individual. Maybe you as Xerox, but not you as an individual. You want personal specificity, which is better represented by the follow-up to the abnormal mammogram. Whom do they get referred to? What's the yield? What's the false positive rate of mammography in the centers that are contracted to your plan? Those are the kinds of questions I would ask.

MC: But isn't there a great deal in the study of outcomes on a physician-specific level that's very hard to pin down?

NASH: Sure, but we're getting there. Look at the American Medical Accreditation Program — AMAP. I'm the vice chair of the physician measurement piece of that — a gigantic national effort. We are going to have detailed, physician-specific measures in the office. And accreditation — the "Good Housekeeping" AMA seal of approval — is going to rest in part by 2001 on how well you do on those measures. So it's happening. We're not there yet. It's a couple of years away, but it's very exciting stuff.

MC: How do you see physicians responding to these new challenges?

NASH: I think there's going to be a lot of controversy surrounding these kinds of efforts. But, like a lot of other things in the business at the moment, it all goes back to autonomy versus accountability. You know, all roads lead to that. No one, including yours truly, wants to be very self-evaluative, but the people who pay the bills are increasingly going to demand that kind of accountability.

MC: Do you see costs taking another upward spike soon?

NASH: That's a good question. I don't really know. There's mixed evidence as to what's going on around the country. Is there a blip increase or not? My hunch is probably.

MC: Today in many places we have HMOs affiliated with all the different doctors, who are also affiliated with all their competitors. What do you see as the answer to that in terms of HMOs influencing physician behavior, which they must do to standardize health care?

NASH: That's going to shake itself out. At the moment the HMOs are obsessed with access, because everybody believes that all health care is local, so in order to be successful, you have to have every doctor in your directory. That can't be sustained for too much longer. If the same doctors are with Prudential, Aetna-U.S. Healthcare and Independence Blue Cross, how can you make judgments about quality for those three systems? And how do you apply all these different measurement systems in the same physician office? I think eventually practitioners will have to declare some allegiance.

MC: Although it hasn't happened as fast as some expected.

NASH: Yes. It's going to. Eventually, I believe, most doctors will be employees, and this problem will resolve itself.

MC: We recently spoke with Alan Hillman, M.D., M.B.A., director of the Leonard Davis Institute of Health Economics at the University of Pennsylvania. And he said studies have shown that the typical physician out there takes the requirements of the various HMOs and "smooshes" them together rather than checking the chart every time.

NASH: Of course, it makes sense. I think of my own practice in primary care. I don't treat anybody differently. It would be too complicated, and there's too much work to do, and I can't remember which drug is on whose formulary. So you develop a generic practice, if you will. But I don't think that that will last forever, because certain firms are going to figure out what works and what doesn't and will only pay for what works. You'll be expected to toe the party line.

MC: Dr. Hillman called for managed care plans in a given area to get together and to practice guide-lines instead of continuing to regard them as a competitive feature of each plan.

NASH: Unrealistic. Alan has assumed the moral high ground, but I don't think it's realistic to think that that will occur. The federal government tried to do that and wasn't successful. The private sector is going to drive guideline adherence and flow of information.

MC: Speaking of the private sector, how pervasive do you find employers' much-ballyhooed concern with quality now as well as cost? Is General Motors going to start telling you how to do a procedure?

NASH: Well, they should. Savvy corporate purchasers know more about practice than we providers do. That's because they have the outcomes information for their own captive populations. Say we operate on a General Motors patient or a Ford patient. In isolation we don't know anything about how we did relative to other people who operated on other GM or Ford patients with the same problem. But you'd better believe that Woody Myers at Ford or Tom Weatherup at GM [Woodrow Myers Jr., M.D., Ford Motor Co.'s director of health care management, and Thomas Weatherup, M.B.A., director of health care initiatives at General Motors Corp.] can tell in great detail what happens when they send patients for back surgery here, versus what happens when they send them to Penn. They own the patient-centered data, and they can make some very powerful decisions about where to send patients. I believe they're very concerned about quality, and, acting on that information, they have the wherewithal to make some important changes in how the market is structured.

MC: Can you see even smaller employers getting involved in this?

NASH: No. Unfortunately, that's where the argument falls down. This is for the Fortune 500 and probably not too many more.

MC: But, of course, there are the purchasing coalitions.

NASH: I would hope the smaller firms would piggyback onto the larger ones in this regard. But as far as managed care companies getting together and agreeing on guidelines, I don't see that happening. I see it coming from a different angle. I see the private-sector, for-profit practice guideline adherence companies driving this. They'll say, "So you want our product? We'll guarantee a certain level of savings when you apply the methodology of Health Systems Technology in Seattle." This is proprietary stuff, and managed care companies aren't going to want to share it.

MC: And yet presumably we'll still have an enormous interest in quality measurements and accreditation. I notice that your printed biography refers to your service on the National Performance Council of the Joint Commission on Accreditation of Healthcare Organizations, the AMA's Physician Measurement Advisory Committee and the board of the Foundation for Accountability (FACCT), which it terms "the three key national groups focusing on quality measurement and improvement." What about the National Committee for Quality Assurance?

NASH: Yes. I think there's lots of overlap. If you were to draw a picture of the quality pie, it has four pieces. One is the Joint Commission, which is concerned with hospital systems. Another is NCQA; they're going to be responsible for whatever structure of managed care you buy. The third piece is doctors; that's going to be AMAP. And the fourth piece of the quality pie is patients, and that's where FACCT comes in. So I've got three of the four.

MC: So you don't dispute the central role of NCQA?

NASH: No.

MC: That's a nice schematic system, but on a practical level doesn't it mean for the HMO that there's someone coming to check you out practically very week, and that a lot of the same things are being checked and rechecked?

NASH: For the doctor in the HMO it's particularly vexing, because if I'm a primary care doctor in four networks, I may have four different inspections by four different medical directors. That's what AMAP is trying to replace. You would get the AMA seal of approval and get what's called "deemed" status, meaning "you passed my test, therefore de facto you've passed all the others." Now, in terms of health plans there is a national power struggle going on between the Joint Commission and NCQA. It's too bad they can't get together. I don't see that happening — two different cultures.

MC: But you do think it would be desirable?

NASH: Yes. I would like to see a more efficient accreditation process. But I don't pretend to have the answer. Dennis O'Leary and Peggy O'Kane have said "We should work together," but that's about as far as it's gone.

MC: But you still see an independent role for FACCT?

NASH: It's really the only group wholeheartedly interested in the consumer. Just look at the leadership and the board structure of all the organizations. FACCT is an employer-driven operation. The others are industry-driven. They're the fox guarding the chicken coop. You can say that of all of them — the Joint Commission, NCQA and the AMA.

MC: You could also say there are turf-protecting aspects to all of them.

NASH: Of course. But that doesn't mean they're bad. And that doesn't mean that you can't be involved with two or three of these groups. But in the ideal world, sure, there would be a czar of accreditation.

MC: Speaking of czars, what about the idea of a Securities and Exchange Commission-like government accrediting agency?

NASH: It's an interesting idea. But I'm a nihilist, and not a centrist — not a federalist, anyway. I can't see, operationally, how that would work.

MC: This is a pragmatic objection rather than an objection to government?

MC: You've studied the role of the academic health center in the managed care world, and I know there's a fellowship here at Jefferson backed by Aetna-U.S. Healthcare that trains future leaders of managed care organizations.

NASH: Yes. The only one of this kind in the country.

MC: It has been suggested that there should be a tax on insurance premiums to support research, and to give academic health centers some of the support they seem to be losing from the government as Medicare and Medicaid trim down. Do you favor that?

NASH: Complicated question. If you believe that academic medicine is a public trust, then everybody has to share in the payment for the public trust. How we do that is a political question. I think the first step is an all-payer system for graduate medical education, because everybody takes appropriate advantage of interns and residents and uses the workload of interns and residents. That's one thing. Number two would be to untangle diagnosis-related group payments for education and clinical work. Much more easily said than done, but doable. Three, I don't believe that managed care companies should pay a tax for research. I don't think that is their mission. But I do believe that everyone has an obligation to contribute toward training, because that is a public good. Research is a harder argument to make.

MC: In a recent Thomas Jefferson University newsletter you cite pairings between managed care companies and academic health centers.

NASH: Yes. The Pew Charitable Trusts have funded an $8.3 million national program, and we're half way through it at the moment. It's the only program of its kind that gives hard-dollar support to create these partnerships, the principal goal being to figure out how to train the doctor of tomorrow.

MC: Do you think public understanding of managed care has come a long way in the last three or four years?

NASH: Well, you would think so — until the American Association of Health Plans blew it with its "Putting Patients First" initiative, which was a public relations disaster.

MC: What do physicians most misunderstand about managed care?

NASH: Do you want the sound bite? The sound bite is "My patient versus the population of patients." That's it in a nutshell. And, of course, the essence of managed care for 50 years has been the care of the population. The dilemma is that managed care makes choices more explicit. We've had these choices implicitly for a very long time. Paul Ellwood and George Lundberg made this point a year ago in the Journal of the American Medical Association. The explicit nature of medical decision-making in managed care is something that our society right now is having a very hard time coming to grips with.

MC: Are HMOs helping when they run "warm and fuzzy" commercials?

NASH: That's a different question. They are simply responding to market realities. Whether it helps or not is a question you need to ask them.

MC: What do you think in general of advertising by health systems?

NASH: Well, it's a necessary function. You can't let the market operate without advertising. It would be like running a two-legged race with your legs tied together. And because there is no political will for legislating a system of health care delivery, the country has in effect decided to let the market run health care.

MC: I'm tempted to ask if there's a danger of managed care getting a bad reputation and being ushered out the door. But I guess that could only happen through some drastic governmental action for which you say there's no political will.

NASH: Yes. I don't agree with critics like Eli Ginsburg and Jerry Kassirer. I think capitation, when done right, is a very powerful force for change and a very powerful motivator in the right direction. Now, the actual mechanism? Sure, that could change. Maybe there won't be a third party involved. Maybe we'll have direct contracting. Maybe providers will create their own risk engines. Sure, all those things are possible. But the idea of "Here's a pot of money. You do what you think is right" — I'm pretty convinced that's here to stay. That's a very powerful offering.

MC: Do any of capitation's incarnations trouble you — if it's applied to individual physicians, if it's applied to too small a group, or if the incentive financially is too blunt?

NASH: Sure. Are there abuses of the incentives, both positive and negative? Undertreatment? Overtreatment? Yes. Are those abuses any different than under fee-for-service? No. We always need to be on guard, but I don't see capitation as a major ethical shift the way some do. And I don't see it disappearing, as a number of very famous people have written that it would. You know — put some steroid cream on it and it'll go away. I don't see what would take its place. I think we're pretty well wedded to population-based care.

MC: We've had a spate of bad publicity lately about managed care.

NASH: It's continuing, and it's probably going to get worse.

MC: Anything we can do about it?

NASH: It depends on whose perspective you're taking. One group seems to think that state legislatures are going to fix things. Organ by organ, disease by disease, state by state. Big mistake. That would be the last group I would want involved in health care. My perspective would be, okay, we certainly understand these anecdotes — Mary Jane being thrown out of the hospital, and Bobby Smith not getting his surgery or chemotherapy. Sure, these things happen. No question. But I think you have to keep your eye focused on the bigger issue, which is how are we going to do the most good for the most people with the resources we have — and in some cases make a profit doing it. That is the key question.

MC: Can you identify a moment in your personal history when it became clear to you that you would be focusing on these issues of how health care is delivered?

NASH: You're not going to believe my answer, but I'll tell you anyway. See that black-and-white picture of a man on my office wall? That's Samuel P. Martin III, M.D., whom I met when I was 17 years old. At the time he was the director of the Leonard Davis Institute at the University of Pennsylvania. I wrote him a letter as a high school senior, telling him I was interested in some of this stuff, and he called me at my parents' home and said, "Come and see me."

Early mentor:Samuel P. Martin III, M.D., of the University of Pennsylvania

MC: How did you get interested in this stuff in high school?

NASH: Well, I didn't know it would be called "outcomes," but I was interested in finding a way to combine business and medicine — to figure out somehow how those two areas worked together. My father is a businessman, and I was interested in science and all the usual high school things, and I just had a hunch that there was some way to combine my interests at the time. I wanted to know what physician leadership in the future might look like. That was really the motivation. I thought that the model from business might one day be applicable to medicine.

MC: What is your own health care coverage?

NASH: We have double coverage, because my wife is a managed care medical director, as you probably know. She's the regional senior medical director for Prudential Managed Care. So we have both Blue Cross and Prudential.

MC: How does that work in terms of choosing providers?

NASH: My doctor is through the managed care plan. My wife's doctor is through the other plan.

MC: Do you notice any differences between them? You must be ideally situated to observe these.